Core sector growth slows to 17-month low of 1.4% in February

Decline in output of crude oil and natural gas pulled down the growth of eight core industries to 17-month low of 1.4% in February. Barring coal, cement and electricity, other 5 core sectors - crude oil, natural gas, refinery products, fertiliser and steel - recorded negative growth during February this year.

The output had expanded by 6.1% in February 2014. The growth was 1.8% in January 2015. The previous low logged by the core industries was in October 2013 at (-)0.6. The eight sectors contribute 38% to the overall industrial production, a parameter that the Reserve Bank takes into account while framing its monetary policy.

Production of crude oil and natural gas contracted by 1.9% and 8.1% respectively in February this year, according to the data released by the Commerce and Industry Ministry.

Refinery products, fertiliser and steel expansion declined by 1%, 0.4% and 4.4%  respectively. However, coal, cement and electricity output grew by 11.6%, 2.7% and 5.2% respectively. For the 11-month period (April-February) of 2014-15, the eight sectors have grown by 3.8% as against 4.2% in the same period of the previous fiscal.

"The slide in core sector growth for the second month in a row...is disappointing. Lead indicators for IIP growth for February 2015 remain bleak," rating agency ICRA said. Since November last year, the growth rate of the core sector industries is declining. It was 6.7%  in November 2014, which fell to 2.4% in December 2014 and then to 1.8% in January. 

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